The Abbott government will commit more than a billion dollars to fund the second stage of Melbourne's East West Link road under a deal hammered out with the Napthine government.

Federal billion for second stage of Melbourne's East West Link

The Abbott government will commit more than a billion dollars to fund the second stage of the East West Link road under a deal hammered out with the Napthine government.

Fairfax Media has learned the federal and state governments have finally reached agreement on Canberra’s contribution to the road in recent days.

The agreement is expected to be formally announced later this week, just days before the Victorian and federal budgets are handed down.

Canberra's contribution of just over $1 billion is designed to bring forward the second stage of the project, which connects the Tullamarine Freeway to the Western Ring Road, and could see preliminary work begin as soon as next year.

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But the $1 billion package falls short of the amount Victoria had hoped for from Canberra, raising the prospect that the state government will have to reduce the scope of the project or find extra funds.

Victorian Treasurer Michael O’Brien stepped up his lobbying of federal counterparts in recent weeks to bring forward the spending as the Victorian state election approaches.

Fairfax Media revealed earlier this month that Mr O'Brien had flown to Canberra to lobby his federal counterparts about the project.

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He said recently he hoped Canberra would contribute more than the $1.5 billion it has promised for the first stage of the project because of the second stage's higher overall cost.

“Our view is the cost of stage two of East West would be more than stage one and we would obviously like to see a commensurately greater contribution from Canberra,'' Mr O'Brien told ABC radio earlier this month.

The first stage of the project is expected to cost $6 billion to $8 billion and will be built from the Eastern Freeway in Collingwood to the Tullamarine Freeway in Flemington.

The second stage of the project is expected to cost more than the first stage, with the rest of the money expected to come from the state government and the private sector.

Stage two will slice through industrial land in suburbs including Brooklyn, Tottenham and Sunshine West, although it is not yet known how many properties will need to be acquired.

Mr O'Brien's trip to Canberra came soon after the Victorian government revealed its frustrations that the federal government had not finalised funding for key infrastructure projects ahead of the Victorian budget on May 6.

The second stage of the project is expected to cost more than the first stage.

The first budget of the Abbott government will be unveiled on May 13.

Tony Abbott has repeatedly said he wants to be an infrastructure prime minister, and this agreement comes less than two weeks after the federal government announced a massive infrastructure package, worth about $3.5 billion, to build roads that will support a second airport in Sydney’s west.

Despite simmering tensions between the federal and state governments, Canberra views the second stage of the East West Link project as a vital piece of economic infrastructure for Melbourne’s west that will link into the Port of Melbourne.

Premier Denis Napthine has urged the federal government to provide more funding for the project to offset the pain caused by the loss of manufacturing jobs in Victoria.

The Napthine government has vowed to sign contracts to begin the multi-billion dollar project just weeks before the November 29 state election.

While Labor opposes the Napthine government's East-West link, it has said it will honour any contract signed before the election, arguing that tearing up the contract would risk damaging the state's strong credit rating and add to the cost of borrowing.

Shadow Treasurer Tim Pallas has urged the government to postpone the signing of the contract so Victorians can vote on whether they want the controversial project at the November election.

Last week The Age revealed that the government's signature infrastructure project was being challenged in the Supreme Court by a legal team who hope to halt the tender process.

Brunswick resident Anthony Murphy and a team of experienced lawyers will allege that the Napthine government engaged in “misleading conduct” over the road's claimed benefits.

The state government has refused to release the business case for the road.